Changing View of Retirement Calls for Changed Planning

June 9, 2014 (PLANSPONSOR.com) – A new definition of retirement means advice and education cannot be just about accumulating a certain amount of savings.

Nearly
three out of four (72%) pre-retirees older than 50 say their ideal retirement
will include work—often in new, more flexible and fulfilling ways, a study from
Merrill Lynch finds.

The
common thinking on retirement is that it’s a sedentary, fixed time of life,
says Ken Dychtwald, CEO of Age Wave, which partnered with Merrill Lynch for the
research. “Work in Retirement: Myths and Motivations” had some surprising
findings, with half (47%) of current retirees having worked or planning to work
during their retirement years. “Incredibly, three-quarters of Boomers said that
continued work would be extremely important in their ideal retirement,”
Dychtwald says.

But
they didn’t intend to continue in the same career path. They redefined work
altogether, Dychtwald tells PLANSPONSOR. Even before actually reaching
retirement, they were envisioning new careers. It’s not surprising, he points
out. After all, Baby Boomers famously have reinvented themselves, changing
college majors with some frequency, changing spouses and religions. “They are
far more likely to reinvent themselves again and again than previous
generations,” Dychtwald observes.

More
than half surveyed (60%) said they wanted to try something new, Dychtwald says,
describing this as “absolutely stunning.” When his grandparents reached
retirement age, they were not thinking of a new career, he says, but these
days, “a bookkeeper somewhere is dreaming of opening a coffee shop. Someone
else is thinking of being a teacher. A financial adviser might like to write a
novel.” People no longer see retirement as the end of work, nor do they desire
a leisured life.

While money and
financial security remain important motivations for retirement careers, nearly
half (48%) say continued “stimulation and satisfaction” are the main reasons
they want to work in retirement. “Older workers have such a powerful storehouse
of knowledge and skills, and companies are waking up to this opportunity. We’re
now seeing a more gradual fadeout of a person’s working career and hopefully a
better harnessing by companies of what older workers have to offer,” said Andy
Sieg, head of Global Wealth and Retirement Solutions for Bank of America Merrill
Lynch, during a press call when the first of three reports from the study was
released (see “Financial Resources for Retirement Changing”).

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PLANADVISERDash is a daily e-mail newsletter addressing the specific needs and concerns of advisers who specialize in the sale and servicing of institutional retirement plans by providing industry relevant news, as well as the latest trends from our proprietary research.